Norwich diocese committee seeks to enforce Catholic Mutual coverage

By Sarah Lizee

Olympia, Wash., Oct. 13 – The official committee of unsecured creditors for Norwich Roman Catholic Diocesan Corp., known as the Roman Catholic Diocese of Norwich, is seeking authority to prosecute and settle insurance coverage claims and causes of auction on behalf of the diocese against Catholic Mutual Relief Society of America, according to a motion filed with the U.S. Bankruptcy Court for the District of Connecticut.

The committee said Catholic Mutual has taken “multiple patently unsupportable positions” to deny coverage to its insured, the debtor, for the sexual abuse claims asserted before and during this bankruptcy case.

“The delta is extreme: $2.5 million of coverage acknowledged versus nearly $21 million of available coverage,” the committee said.

“Since the Norwich Diocese has unjustifiably failed to commence suit to seek to enforce this available coverage, the committee should be permitted to enforce the coverage afforded by the applicable certificates issued by Catholic Mutual in the years prior to the commencement of this bankruptcy case.”

The committee said that while it continues to engage in settlement discussions with the parties through mediation, the relief it is seeking in the motion wouldn’t impede those talks.

The group said it would accept from the debtor, as part of a global resolution toward a joint plan of reorganization, an assignment of all its right, title and interest in the applicable certificates issued by Catholic Mutual – and all related claims and causes of action – to a liquidating trust for the benefit of the allowed claims for sexual abuse in this case.

“The coverage dispute should not, then, impair the debtor’s ability to otherwise resolve this case with the committee,” the group said.

“To the contrary, granting the relief requested by this motion would facilitate the debtor’s resolution with the committee and, consequently, its own reorganization.”

The Norwich, Conn.-based diocese filed bankruptcy on July 15, 2021 under Chapter 11 case number 21-20687.

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